Microsoft is being hit hard by US sanctions on Russia

Payment deadlines make large purchases difficult

As home to many global technology giants, the United States offers a friendly market for businesses to engage in international trade. Unfortunately for Microsoft, politics can sometimes get in the way of doing business. Sanctions on Russia as a response to hacking activity and involvement with Ukraine have created great difficulty for selling products abroad.

Sanctions require that Microsoft collect payment within very short time spans so as not to violate financial rules. There are two major distributors for Microsoft in Russia, Merlion and RRC. Merlion has requested that buyers consider paying upfront for Microsoft products if new tighter deadlines could be a problem. RRC declined to comment on specific changes but has stated that "serious restrictions are being introduced."

US tech firms are not restricted from selling standard products to Russia, but must ensure that any form of credit or loan does not exceed 30 days under most circumstances. Many Russia suppliers are forced to wait several weeks and often months to receive payment after sending an invoice. Microsoft will no longer be able to wait and is likely to lose out on sales as a result of government imposed restrictions.

Violating sanctions for US businesses can carry heavy penalties for individuals involved. First-time violators can be handed a $250,000 fine, or up to twice the amount a sale was made for. If a civil case determines that a violation was intentional, fines up to $1 million and up to 20 years of jail time can be handed out to those responsible for infractions.

As restrictions become even more strict, figuring out which companies are actually on sanction lists becomes difficult. Shell companies are being set up by Russian entities as a means to bypass international trade regulations. Deals can also by made by proxy of a third party in attempt to obtain goods or services that would typically be restricted.